Hardware takes 61.7% of the $98.5 billion grid upgrade market in 2026

Of the $98.5 billion the world is expected to spend modernizing power grids in 2026, 61.7% goes to hardware, according to a forecast Coherent Market Insights published on October 28. The firm expects the market to reach $145.2 billion by 2033, growing at a compound annual growth rate of 5.70% from 2026 to 2033.

The split tells buyers more than the total does. A market weighted this heavily toward hardware suggests factory output could set the pace of spending, and at least one critical component already sits in a queue measured in years. For a utility supply-chain lead or a transmission developer's procurement director, the forecast describes who gets equipment, when, and from which plant.

Feeders and automation take the budget

In Coherent's segment data, distribution grid modernization represents 55.6% of the 2026 market, with an indicative 6.2% annual growth rate through 2033. These are the local networks, the feeders serving homes and businesses, and Coherent's reasoning is that electricity flows across them are changing, so they need targeted reinforcement. The firm points to SSEN Distribution's $601.85 million programme, announced in April 2025, to renew overhead lines, substations and underground cable across northern Scotland, as the kind of project filling that segment.

Grid automation and control holds a 28.5% share in 2026, with an indicative 6.7% annual growth rate. Coherent ties it to equipment such as ABB's Relion REC615 relay, introduced in May 2025, which combines protection, fault indication, monitoring and control for medium-voltage distribution.

Hardware is expected to grow at an indicative 5.4% a year, against 5.7% for the market as a whole. Coherent's explanation for its weight is plain: transformer replacements and network reinforcement require specialized equipment, so physical assets command substantial project budgets.

The State of Grid Resilience 2026 study, independent research by Zpryme that T&D World covered on October 22 in a piece by Kumar Chandran, found more than half of respondents identified the distribution grid as the greatest opportunity to improve customer outage outcomes. More than half also expect substantial growth on the distribution system over the next decade. Distribution automation, FLISR and system hardening ranked among the top priorities for future investment.

Chandran's argument is that storm performance is decided years before the storm, through investments in the distribution system, automation, hardening and operational visibility. Automation limits how far an outage spreads. Hardening reduces the infrastructure damage in the first place.

A forecaster's segment shares and a utility survey agreeing on feeder-level automation is a useful cross-check. It suggests the distribution money in Coherent's model reflects programs utilities are already planning to fund.

Bushings, backlogs and a Meta contract

Coherent's hardware number becomes concrete once you look at a single part. Trench Group, the Berlin-headquartered maker of bushings, instrument transformers, coils and reactors, has been scaling rapidly as utilities, transmission developers, equipment makers and hyperscalers compete for the equipment needed for grid expansion, according to POWER Magazine's interview with president and CEO Bahadir Basdere.

The pressure points in that interview start with two-year bushing lead times, then run through hyperscaler demand, U.S. manufacturing expansion and the emerging 765-kV build-out. At two years, a bushing ordered this autumn lands around late 2028. That is the queue a hardware-heavy budget runs into.

Trench, independent from Siemens Energy since April 2024, has doubled annual revenue to more than €1 billion and built an order backlog above €2.1 billion. It has committed about €400 million to expand production through 2030 across its 11 factories in eight countries, and expects headcount to rise from more than 3,000 to about 4,000 by then. Basdere has led the company since the separation; before that he ran Siemens Energy's global bushings, instrument transformers and coils business, a network of 10 factories across four continents.

The most telling detail for North American buyers is in Charlotte, North Carolina. Trench opened its first U.S. plant there in July 2026, a more than $60 million, 170,000-square-foot facility making dry-type transformer bushings from 25 kV through 765 kV. Initial output is about 3,500 units a year, with room to grow to as many as 10,000. The top of that range lines up with the 765-kV build-out Basdere flags, so the first U.S. plant is built for the newest tier of transmission as well as lower-voltage work.

Separately, Trench reached a strategic capacity agreement with Meta covering dry-type bushings for the company's growing worldwide network of hyperscale data centers. The deal shows that data center owners, not only utilities, are now securing grid components directly from the factory. Coherent's report notes a second supply signal: in September 2025, Siemens Energy announced a USD 246.82 million expansion of its Nuremberg transformer factory to increase manufacturing capacity.

Suppliers are also changing what they sell. At CIGRE Paris 2026, Trench unveiled a co-engineered package of Enerlux capacitors, Trench Austria reactors and Trench instrument transformers from a single supplier. The package is meant to reduce the resonance, physical coordination and commissioning problems that can surface when those components are engineered and supplied separately. In an August 25 release, Basdere described power quality as among the strongest-growing segments of grid infrastructure. He said the company can now give customers the full tailor-made component package from one source. For a buyer, that could mean fewer supplier interfaces to manage on a project where each component already carries its own wait.

When 61.7% of grid modernization spending is hardware, factory capacity sets the pace. For operators planning new projects, that suggests equipment reservations could need to be part of the earliest planning stages.

Asia Pacific buys at scale

In Coherent's regional outlook, Asia Pacific is expected to account for 43.5% of global revenue in 2026, with an indicative CAGR of 5.0% during 2026 to 2033. Coherent links that share to large electricity systems that need major investment in long-distance power transfer and high-capacity substations. As evidence, it cites India's Ministry of Power, which reported in July 2026 the addition of 35,172 circuit kilometres of transmission lines over the preceding three financial years.

The region's distribution spending is just as visible. In September 2025 the World Bank approved $500 million for Indonesia's Electricity Network Transformation (I-ENET) Program, which modernizes distribution networks across Java, Madura and Bali, with goals of stronger reliability, digital transformation and renewable integration. Taken together, India's line additions and Indonesia's distribution program show Asia Pacific's share spread across both grid levels, which helps explain why the region tops the revenue table despite growing more slowly than the global market.

North America grows fastest, under rate pressure

North America leads Coherent's regional growth outlook at an indicative 7.1% a year from 2026 to 2033, from a 24.2% share of global revenue in 2026. The policy backing behind that growth shows up most clearly in a second forecaster's numbers.

Global Market Insights, in a separate October report on the region's narrower smart grid market, puts that market at $29.8 billion in 2026, growing 8.3% a year to $61.0 billion by 2035, up from $16.5 billion in 2022. GMI measures vendor revenue from hardware, software and services sold to utilities, grid operators and energy companies across the U.S., Canada and Mexico. GE Vernova led with more than 13.5% in 2025, and the top five (GE Vernova, Schneider Electric, Itron, Honeywell and Eaton) held 46% between them.

GMI cites the $10.5 billion Grid Resilience and Innovation Partnerships program and $3 billion in dedicated Smart Grid Grants, authorized under Section 40107 of the Bipartisan Infrastructure Law as part of GRIP. Its forecast assumes demand moderates only as GRIP disbursements approach completion, which makes federal payout schedules a planning variable for vendors. It also notes the Energy Information Administration counted 140.49 million advanced meters installed in the U.S. in 2024, a base GMI expects to enter a replacement and upgrade cycle, and lists FERC Order 2222, which requires grid operators to accommodate distributed energy resource aggregations in wholesale markets, as a further driver.

Demand pressure is real, and so is the bill. In the Zpryme study, three in four respondents said operational risk has risen over the past five years, and more than 80% named AI and data centers as significant drivers of future electricity demand. Nearly eight in ten expect resilience spending to increase over five years, yet 61% called affordability and customer rate pressure the biggest barrier to moving faster.

Equipment supply is not the only brake, either. GMI says workforce availability and brownfield-system complexity influence how quickly contracted programs turn into deployed revenue, and Grand View Research lists high investment costs, supply chain constraints and complex regulatory processes as limits on the pace of upgrades. Read together with the 61% affordability figure, that suggests a utility could have bushings on order and still be held back by crews, legacy systems or rate cases.

The hardware-heavy picture also describes 2026 better than 2033. Hardware's indicative 5.4% growth, below the 5.7% market rate, suggests its share could narrow over the forecast period. GMI describes utility programs shifting from one-off equipment purchases toward multi-year portfolios that bundle physical upgrades with software, data management, cybersecurity and managed services, which would move more vendor revenue into recurring contracts over time.

Same totals, different counts

Grid market forecasts deserve a careful read before anyone puts them in a business case. Grand View Research publishes exactly the same global totals as Coherent, $98.5 billion in 2026 and $145.2 billion in 2033 at 5.7%, along with the same 43.5%, 55.6% and 61.7% shares.

The details diverge. Grand View sizes 2025 at $94.2 billion and labels those shares as 2025 figures, where Coherent assigns them to 2026. It names Middle East & Africa, not North America, as the fastest-growing region, and gives electric utilities 69.6% of spending by end use. Identical totals with different year labels and regional leaders suggest treating the two as one shared estimate rather than two independent confirmations.

Change the definition and the picture flips. SNS Insider, in a July paid press release on GlobeNewswire, sized the global smart grid market at $65.40 billion in 2025, growing 15.6% a year to $278.71 billion by 2035, with software as the largest component at 37.6%. That compares with 5.7% a year in Coherent's forecast, where hardware, rather than software, leads. SNS also expects hardware to post the fastest growth of any component, the reverse of Coherent's ordering.

North America shows the spread most clearly. Coherent's 24.2% share of $98.5 billion works out to roughly $23.8 billion of grid modernization spending in 2026, less than the $29.8 billion GMI assigns to the region's smart grid market alone. Growth rates for the region run from 7.1% (Coherent) to 8.3% (GMI), while SNS puts the U.S. alone at $17.23 billion in 2025, rising about 15.5% a year to $72.74 billion by 2035.

Factories will give a clearer signal than another forecast revision. Trench's Charlotte plant has room to grow from about 3,500 bushings a year to 10,000. How quickly it fills that room will show whether North America's 7.1% is held back by demand or by equipment supply.